What’s Next For Bankers And Banking?

The banking industry has caught its share of flack for the industry’s part in what has come to be known as “The Great Recession.” Not without cause, mind you, but virtually nobody saw what was coming. With the exception of a handful of people such as Steve Eisman, Michael Burry, and Greg Lippmann (read Michael Lewis’ book, The Big Short: Inside the Doomsday Machine. New York: W.W. Norton & Co.) bankers not only did not see but were hurt by the financial collapse of 2008 as much as any sector. In fact, in 2004 the FDIC said, “Within the banking industry, we conclude that each of the three main sectors—community banks, regional and other midsize banks, and the largest banking organizations—has favorable prospects for the years immediately ahead, even though the number of institutions is likely to decline further. What could materially diminish these relatively favorable prospects?”*

The question is simple; where do bankers go from here? With a return to conventional lending standards, and the inability of the majority of consumers failure to qualify for those standards, bankers face a double-edged sword. With the flight to security of depositors and the inability to lend those funds to qualified buyers, banks find themselves in a unique paradigm.

The immediate challenge is to stay active in the communities in which these banks and bankers work and live. Good banking business is still out there, bu the days of sitting in the bank waiting for business to come in the door are over. The flight to quality in loan underwriting notwithstanding, bankers must compete and win the battle for quality relationships like never before. Forget marketing; does your bank have a CRO (Chief Relationship Officer) tasked with developing a strategic relationship development program for its officers and directors? It is no enough to join organizations and be visible.  Banks must aggressively and strategically develop a plan to own the key relationships in their marketplace.

*The Future of Banking In America; George Hanc; Former Associate Director, Division of Insurance and Research, Federal Deposit Insurance Corporation.